Reduction of MTN fine a ‘positive’ move

Nigerian regulators’ decision to reduce MTN’s multibillion-dollar fine is a “positive” move and if the penalty was “arbitrary”, then the company would have turned to the courts.

This is according to a board member for the South Africa-Nigeria Chamber of Commerce (SA-NCCC) Francis Osuyah.

This week, the Nigerian Communications Commission (NCC) reduced the company’s fine from US$5,2bn to $3,9bn. MTN Nigeria was initially fined $1 000 for each of its 5,1m unregistered Sim card users.

This reduction, though, came amid the NCC admitting that it made a mistake by first telling MTN that the fine had been reduced to $3,4bn this week. The NCC on Friday said this was a “typo” in a first letter and it then sent the company a second letter indicating that the fine was actually $3,9bn, reported Bloomberg.

MTN’s share price was subsequently down by over 2% in trade on Friday. The fall-out from the fine, though, has had wider ripple effects as group CEO Sifiso Dabengwa quit last month and this week the company confirmed that its Nigeria CEO, Michael Ikpoki, had also resigned.

But the SA-NCCC’s Osuyah said the reduction of the fine should be seen as a positive development, even though it still amounts to a huge sum.

“The fact that they have considered a discount to the original fine, I think it’s positive. If they insisted on the $5,2bn at this stage that would be a different matter altogether,” Osuyah said by phone on Friday.

“So, I’m quite pleased that the discount has been considered and approved,” he said.

Security implications were also a key consideration for the fine, said Osuya.

Nigeria’s Sim registration process — which was launched in 2013 — was designed to help curb the use of unregistered phone lines by criminals and militant organisations.

The regulations came into effect at a time when activities from militant group Boko Haram were being ramped up in the northern parts of the country.

“What I think what happened is that because of the security implications, the government I think tried to send a message that ‘look, our primary responsibility is security’,” Osuyah said.

Osuyah added that if MTN Nigeria only had 1 000 or even 100 000 unregistered Sim cards, it would have faced respective fine of either $1m or $100m, which may have gone unnoticed.

He also said that “if the fine was arbitrary, they (MTN) would have challenged it in court”.

However, Osuyah further praised MTN’s approach of consulting the NCC as being “constructive engagement” and a key reason for why MTN “succeeded in getting a discount”.

The SA-NCC, which was established in 2005, describes itself on its website as a non-profit organisation aimed at promoting, facilitating and assisting Nigeria-related business in South Africa. — Fin24